The Canadian government is considering terminating an armored vehicle deal with Saudi Arabia, and manufacturer General Dynamics [GD] on Monday said the decision could cost the country billions in losses.
Prime Minister Justin Trudeau announced Sunday he is looking into ending the potentially $13 billion deal to deliver General Dynamics Land Systems-Canada’s (GDLS-C) LAV fighting vehicles to Saudi Arabia as Riyadh faces continued pressure for its actions in Yemen and the murder of journalist Jamal Khashoggi.
“We are continuing to execute our valid and binding contract. Were Canada to unilaterally terminate the contract, Canada would incur billions of dollars of liability to General Dynamics Land Systems-Canada,” a company spokesman told Defense Daily.
The 14-year LAV deal with Saudi Arabia was announced in February 2014, and is expected to be worth between $10 billion to 13 billion.
Canada announced in October it would no longer approve new arms deals with Saudi Arabia.
Trudeau had previously said ending the vehicle deal would be a costly move resulting in job losses, but in his latest remarks noted the government is exploring how to cease future deliveries.
The Canadian government has not detailed how a termination of the deal will play out, or what will happen to the remaining vehicles under production in the program.
“In addition, terminating the contract would have a significant negative impact on our highly skilled employees, our supply chain across Canada, and the Canadian defense sector broadly. We hope that we will be allowed to continue to keep building sophisticated, high-value equipment in Canada,” the GDLS-C spokesman said.
The chairwoman of the House Defense Appropriations subcommittee earlier this December said the U.S. should consider banning weapons sales with Saudi Arabia that the country is using in its involvement in Yemen (Defense Daily, Dec. 3).
The Senate last week also voted to end U.S. support for Saudi Arabia’s continued actions in Yemen.